Ack! As in Ack!quisition...
A is for Ack! As in acquisition of aQuantive (wow, now that is a five year chart).
Six billion dollars.
$6,000,000,000USD.
Holy crap.
In my opinion, this is a huge demonstration of fear, desperation, and dim-dog market tail-light chasing greed on our part. Every acquisition represents our failure to use our 70,000+ employee base to solve a solution or create a new market. Rather than buying back stock or pushing out a dividend, shareholder money got mis-invested in a hugely overpriced acquisition. And you're a shareholder why?
Seeing how much aQuantive is aligned with us and our technology stack makes you on the surface say, "hmm, yes, excellent strategic acquisition." Then you see the price tag (and goodness help you if you see it in the middle of taking a sip of something). "Who the hell is in charge here?" And of course, that reckless, desperate spending is now what disgruntled people will hold up as the paragon on executive spending, wondering why we're being so pound foolish while saving relative pennies for ESPP and other cut-backs.
Deal Journal - WSJ.com Bubble Wrap How Will Microsoft-aQuantive Be Remembered has this interesting gameplay comment from Steve Yuen:
Speaking of News Corp, its $5 billion offer for Dow Jones’ stable of premium brands is eminently rational compared against Microsoft’s $6 billion proposal for aQuantive. MSFT is playing checkers while GOOG plays chess.
24-7 Wall St. Microsoft Bid for aQuantive Signals Desperation
Shares of AQNT were trading at $36 yesterday and that quote was pricing in a lot of buyout speculation already. Somehow they got Ballmer and Company to offer more than $66 per share in cash, an 85% premium. Such a bid puts Mister Softy on the hook for a cash outlay of $6 billion. In return it gets a business at 104 times trailing earnings, 86 times current year earnings, and a whopping 67 times 2008 earnings.
The Key Why Microsoft's purchase of Aquantive is So Smart
Aquantive, through its Atlas division, has built the most advanced ad tracking and management technology out there. It can follow every detail of an online display ad--and help advertisers figure out where to target an ad and to whom with incredible precision. But Aquantive also tosses search data into the mix--and certainly it will do this more and more as part of Microsoft.
Microsoft agrees to buy aQuantive for $6 billion and Microsoft faced competition in aQuantive bid
"When Google bought DoubleClick, which is the prize here in the industry, it made Microsoft look more and more behind, and I think they just had to do something," said Tim Bueneman, senior vice president at McAdams Wright Ragen in Seattle and a devoted aQuantive investor who speaks highly of the company.
Even so, Bueneman said he "was just totally shocked" at the price, adding that it seems to reflect "a little bit of desperation" on Microsoft's part.
And of course there's the addition of the, what, 2,600 potential employees? Ah, screw it. If people haven't figured out that we have way too many employees by now I'm certainly not going to be able to help.
Post-Town Hall and myMicrosoft. Hey, was there a change in the way we're granted stocks? Man, what a wonderful demonstration of a small bit of poor communication that resulted in heated discussions. I think people are still trying to figure it out. Okay, backing up: I think it is great that the Town Halls happen, hopefully on a quarterly basis. It provides an important connection between executive leadership and the rest of us (and the potential for audience video cameos by [slick down the eyebrows, straighten the shirt] damn good looking Microsofties). This last one was pretty light in content, though; I would be just as happy with a few emails to skim through instead. It would be nice to have a big topic or two to cover in the future... things like:
- Microsoft and The European Union: how is this going? This isn't just a thorn in our side but rather a bramble growing through our veins. And we hear very little directly from our leadership regarding how this is going and how we expect decisions and outcomes to affect the company.
- Intellectual Property vs. Open Source: what's the strategy here? For the longest time, we've held off throwing punches here because we knew, although there are infringements, it would be costly to wage this battle on the public stage. What changed? GPL3?
- Windows 7 and Office 14: how are the cash cows next iteration shaping up (I mean, I know, but I'd like to hear what leadership thinks)?
- Windows Live / Core / MSN / Search: is this relatively detangled and figured out? So much groovy potential.
- Zune / WMP / WMC and DRM: I know, no where but up for MP3 player market. Have we acknowledged the anti-DRM movement? Are we brave enough to take a step in that direction?
Regarding myMicrosoft: tweaks. Iterative tweaks that seem to be focusing on the tail-end of being a Microsoftie and not even getting close to undoing Mr. DiPietro's professional failings as an HR manager. The workflow evil, time-consuming career performance tools remain, they just get consolidated into one site. You can provide feedback up the chain and provide ad-hoc feedback for other people. The financial planning stock grant change. The ability to ship packages again-OMG that's awesome! Lisa I love you! I-ahem, eh, excuse me.
Hey, my gushing reaction to the return of employee shipping really surprised me: again, they're returning an easy benefit that was yanked away some time ago. An awesome, time and money saving benefit for those of us who ever have to ship packages. I still miss the flip-side to that coin: direct office delivery of personal packages shipped to me at work. Both of these save me time and help me get work done. Now, I have to occasionally clear my schedule so that I can work-at-home the day that my new personal laptop or handheld or some other package I have to sign for is arriving.
Oh, and Limited II? Well, now you're just a 10%'er. You were before, but because of the screwed up metrics not being well thought-out managers wanted to soften the blow for you ending up in the 10% bucket. I don't think we're going to introduce 10% II or 10%+ but I wouldn't put it pass HR once managers start seeing super valuable high-level employees that have plateaud dropping into the 10%.
But nothing about 15% ESPP or increased 401K or the MSPoll. Well, it was probably too early for the MSPoll numbers to be revealed, but... OUCH! I'd say anything below 60% requires action and anything - from the broad-Microsoft-as-a-company questions - below 40% requires executive leadership action. Or at least acknowledgement.
Some interesting comments to wrap up on: from the school of suck-up-your-salary-compression, T.Higgins shares:
As a person who has been with Microsoft for 8 years and contributed (in many public facing ways) to improve the perception of Microsoft in the developer community, I [was] provided information that shocked me. Actually, it makes me angry. A new hire straight out of college (read: no experience) will be compensated slightly less than I currently earn. Never mind that there is a $5000 signing bonus AND because there is, apparently, no space will be given the summer off before even swiping her badge.
Is it time to just give up stock compensation altogether and just give the people cold-hard-cash (or acceptable raises):
I think it's time for Microsoft to end giving stock awards to low and mid-level employees. Keep, and even bolster ESPP, but let's stop pretending that stock is a significant portion of the compensation package. It's been years since anyone worked harder because stock options were vesting. Let's admit to ourselves that there is now a rank and file at Microsoft; pay them commensurate to their value in the marketplace and even base raises on group/division profitability, but let's not pretend anymore that employees have an ownership stake in the company.
As a manager, it had become rather embarrassing to hand my L59-61 employees their pittance of shares. Incentivize people with promotions to technical leadership or partner jobs, and work to returning promotions to a merit system from the nepotistic buddy system in place today.
And one last one to reflect on our awesome compensation package vs. the potential raise you can get working beyond Microsoft:
I left Microsoft one year ago. my biggest fear when I made the decision to leave was the health benefit change. As you mention, no one even comes close to what you get at MSFT. Well, let me share my experience with you. Background - I have 3 kids and I am 35. I left as level 63 and made back then about $115K a year. I left because I got an offer (that most people at MS could get but just don't try) of about $180 a year.
My total out of pocket in health is about $1000 a year. So the math becomes very simple. you CAN MAKE much more outside of MS. There is so much going on outside.... benefits at MS are OK but JUST OK.
Striking my best Arsenio Hall pose here: "hmmmmmmmm..."
170 comments:
You know what would be cool, or at least a bright side of this acquisition? If all divisions had to pony up open and bubble headcount to absorb employees of aQuantive. Then at least we'd have no HC growth as a result, just filling open slots.
I'm an ex-softie and not a fan, but wtf is going on there??? I just don't get it. I am now convinced that it would have been a big favor to everyone if the DOJ HAD split up Microsoft (something I thought was a bad idea then). I just can't imagine the amount of random churn there. It's like the thousand monkeys with the thousand copies of Power Point taking a thousand years to come up with a winning business plan. What are the design makers consuming over there???
About the comment "you CAN MAKE much more outside of MS".
This is so true. I left MS after almost 10 years there about 6 months ago. I now have a significantly higher paying job.
What's funny is that during the exit interview, they threw everything out there. "You're benefits won't be as good." "Here's a promotion if you stay." "Have you looked at a different group?"
I have to say the question I enjoyed the most was when they asked how MS compensation compared and the surprised look I got when I said "It sucks." and told them how much I was going to be making and that it only took three days to have multiple offers on the table.
I have a better job, my stress is down, I my work has improved, my manager isn't using me as a stepping stone, I get credit for the work I do, and the amount I now pay for benefits doesn't come anywhere close to the increase in pay. (My hair is still falling out though).
"My total out of pocket in health is about $1000 a year. So the math becomes very simple. you CAN MAKE much more outside of MS. There is so much going on outside.... benefits at MS are OK but JUST OK."
you can make more than an L63 does at MS if you sell cars, copy machines and pharmaceuticals, but who wants to actually do that?
i know a *ton* of people who have left MS at the 63/64 level in the last few years, and ain't none of them gone on to a massive paycheck -- they left to do cool stuff, and most of them took a fairly hefty cut in total yearly comp.
of course, if you want to go work on crappy plumbing stuff or if you want to be some company's director of IT (shudder) or a consultant (double shudder) then you can pull-in 180+ pretty easily... but again, who wants to do THAT?
I spoke to Steve Berkowitz, the VP of Microsoft's Online Services Group several weeks ago in New York about placing ads from Microsoft on community blogs, he said we want to do it right and we're not ready yet.
Microsoft became successful by Partnering with companies big and small, so why not include Partners in the new advertising strategy?
The software for delivering ads should be easy for the worlds largest software company to build, what's needed is an auction site where where ads can be bought and sold by Partners big and small.
This post is just dumb.
Exactly how is Live meant to compete with GOOG if mgt doesn't support us with good acquisitions?
We might be able to build better mousetraps but
a) no-one cares - on the web it's about being where the people are, not about functionality.
b) we can't do it as fast as GOOG because frankly, they have more genuine experts than we do and their processes are more streamlined.
Yeah, the price might be a little high, but so what? Online advertizing is set to grow many multiples of that price, and if this helps us grab a big piece of that pie, then I'm all for it.
How exactly would you propose to get us some of that sweet advertising money Mini?
Mini seems to be going backwards … It is just too easy to bitch … Although I do agree that I would like to be able to have packages shipped to work! (Old ESPP sounds better too, 15% discount on the lower of the starting and ending share price.)
Okay, here is the deal. If Microsoft shrinks down in size (more than 10k) and is still a great place to work I’ll be one of the first in line to say Mini was right.
Now, if this Ad business does take off and becomes a strong growing and profitable business, will you Mini give credit to the Microsoft leadership?
I was just talking to a friend at IBM on Thursday and she was asking me about the rumours of a Yahoo acquisition. My response was along the lines of "Microsoft has an inferiority complex and I hope it doesn't drive them to do something rash".
I wake up the next morning to hear about us spending six billion on a company I've never heard of while waiting for Outlook 2007 to finish its 2+ minute load time . . .
Serenity now.
MyMicrosoft 2.0 is a net negative for employees. Not a single issue of any importance was addressed.
Executive leadership is as disconnected as can be.
Six bbbbaaabillionn. Congrats to Aqu! Wow. Bubble 2.o kicks butt.
Lesson One: Microsoft's new domain is ad based, alien territory, but probably something Ballmer would feel right at home doing. hint hint.
Wait... better not. All the new talent might leave.
The benevolent troll.
BTW, your blogger servers were down and yesterday, multiple blue screen attacks were easily survived when I logged onto Mini posting page.
Must have been one of those Starlings.
The Good Troll.
Sorry Mini, but when you wrote Ack! I could not help but be sucked into that old B-movie memory lane of the works of Tim Burton, here:
http://www.timburtoncollective.com/sound/mars7.wav
and here (re AcQ logo):
http://www.timburtoncollective.com/sound/mars1.wav
Joking aside, interesting comment by Ed Sim at BeyondVC.com:
"but will clearly admit that when it comes to managing a public company and having to hit quarterly revenue targets, you have to listen to your customer, the advertiser."
I guess that is a lesson maybe Microsoft might begin to look at. Who are Microsoft customers anyway? Business? Advertisers? Gamers? Joe Sixpack? End Users? All of the above. Maybe the key to your sagging stock is the failure to understand who your customers really are and therefore failure to target products accordingly by listening then defining products accordingly.
Hey, was there a change in the way we're granted stocks? Man, what a wonderful demonstration of a small bit of poor communication that resulted in heated discussions. I think people are still trying to figure it out.
>
This is a cost cut move. Gates and Ballmer are planning to welcome another 30+ thousand people in the next three years to compete with Google.
Now, if this Ad business does take off and becomes a strong growing and profitable business, will you Mini give credit to the Microsoft leadership?
Similarly, do you presently "give credit" to the Microsoft leadership for its' existing unprofitable business lines, and given the acquisition is for at least double the MCAP on future earnings, will you define "profit" as exclusive of acquisition expenses ( as Zune and Xbox are said to be "profitable" by ignoring the sunk R&D costs)?
Is "Microsoft leadership" the reason for the profit of Windows and Office?
What precisely are the standards of "profitability" and "accountability" as they apply (if at all) to Microsoft leadership? Inquiring minds wanna know.
That "another 30+ thousand people" comment is really depressing. We don't know how to use the people we have, and most of our best work and best decisions are delivered by teams of 1, or occasionally 2, people.
If only Bill would declare June "Mythical Man-Month Month" in Redmond and make everybody read the book and apply it.
Interesting re-org in putting STB under Jeff Raikes. Does anyone else think this looks like a pre-cursor to a break up? I mean, now we can cleanly carve off Windows into its own company, MBD into another and then whatver we do with Live and Entertainment. Honestly, that would be cool. I want the company broken up. I'm in Raikes' world and I'd love that group to be decoupled and given some more freedom to innovate.
>I'd love that group to be decoupled and given some more freedom to innovate.
Amen to that. Put you hand on the radio and hope.
Dang, I might even $BUY$ a new operating system from 'Microsoft Whatever' some day if that were to happen.
Compensation - other than doubling your salary, there is also the sideways move into real work/life balance.
I moved to a position at the UW. I am making only 85k, down from 96k (62), but it's a real easy 9 to 5 job with perfect job security. Compared to working my ass of 7 days a week to get promoted ("You're really close, maybe next year") that's a much better hourly rate.
Health insurance is not an issue, and everyone I meet comments on how relaxed and happy I look - the lower stress level might be better for my health in the long run than being insured by Premera.
Mini,
I've thought about the stock compensation stuff at length.
Stock options were great. Sure, those of us in the trenches didn't get the huge payoffs that those higher up did, but it did have everybody focused on a specific goal.
As somebody who holds a fair number of stocks, I do understand the arguments against stock options, and agree with most of them. In tech companies, stock options are used to keep compensation off of the books and take the money directly from the shareholders. Now, you could keep stock options if you were willing to expense all of them (and I'm frankly not sure why we didn't do that - well, I *suspect* I know why, which I'll get to in a moment...). But we chose to switch to stock awards...
Which aren't really worth anything. Options are motivators to being productive and efficient (so the stock price can, with any luck, go up). Awards, on the other hand, are motivators to stick around and vest, and not rock the boat. And as such, are exactly what MS doesn't need. I think we chose them as a nice way to reward partners excessively (through their own compensation system) while still giving something to the rank and file.
And I agree with you that it should be abolished.
What I don't understand is why this company doesn't have a simple profit-sharing plan. Profit-sharing has been effective for years and years, and would once again focus people on the bottom line. And it wouldn't have to cost more than the amount spent on stock.
Now, if this Ad business does take off and becomes a strong growing and profitable business, will you Mini give credit to the Microsoft leadership?
Of course. The question is, how deep is the hole currently that we have to fill to match return-on-investment? At least $6,000,000,000. Maybe plus another $2,000,000,000. Once we have that filled and are making quarterly profits I'll be the first to go to Live Search, enter "eat crow", and find which one of our advertisers can help me with that endeavor.
When will that date be? Will it be before or after the Xbox business investment has made up for its billions?
It makes sense for us to have a presence in this space. Good business sense. Just... how much is the price of admission? If we acquired AQNT for $10,000,000,000 would that still have made sense to people out there? Where's the line?
Let's take a look at just some of Apple's acquisitions over the years:
- Apple buys Nothing Real, developer of linux-based "Shake" compositing software; turns it into OS X-only "Shake" (goes on to win Oscars, etc.)
- Apple buys Key Grip from Macromedia (cross-platform NLE video software); kills Windows version; turns it into Final Cut Pro (versions 1-6);
- Apple buys Spruce Technologies and Astarte (makers of DVD-authoring software); turns their work into iDVD and DVD Studio Pro; then makes all aforementioned video software integrate together;
- Apple buys Emagic (makers of Logic and Logic Pro, audio editing software); re-brands Logic and (probably) uses these assets to make Garage Band;
- Apple buys portions of what becomes the iPod software from PortalPlayer and Pixo;
- Apple buys SoundJam jukebox application from Casasy & Greene and turns it into iTunes (the only software on this list that is re-deployed for Windows).
There's more (including the company that designed the datamining algorithms that let OS X Spotlight see inside Word documents and PDF files) but I think I've made my point.
Interesting re-org in putting STB under Jeff Raikes.
Raikes/Johnson power struggle, and KJ lost this battle?
Charles and Mini:
Your definition of profit is strange. If somebody buys Microsoft today, even without premium, by your definition, it will take 20 years to make a profit by the buyer.
There is a notion of P/E. All Xbox needs to do is to make few millions dollars profit with a good growth rate to eventually reach a profit of $100M annually to justify all the expenses of developing Xbox business. Similarly all we need to do is to increase the growth rate or profitability of AQNT by few percentage points, due to synergy, to recoup the premium.
Yes you may repeat your usuall rant that AQNT would become less efficient under our bloated cost structure. In that case we should have offered the negative premium.
"Where's the line?"
Hard to say, but it will be easy to measure in the end. Microsoft has healty income statement and balance sheet so just looking there won't tell much. I think that when the MSN segment (including ADs and probably search) is profitable and growing with it being confirmed by our stock price over $50 ... then you can consider the line crossed.
"I moved to a position at the UW. I am making only 85k, down from 96k (62), but it's a real easy 9 to 5 job with perfect job security. Compared to working my ass of 7 days a week to get promoted ("You're really close, maybe next year") that's a much better hourly rate."
yuck, both of those options are to be avoided at all costs IMO -- and it's people looking for that perfect and "easy" no-stress 9-5 job who i want OUT of *my* microsoft... LIKE YESTERDAY.
there's a huge difference between sacrificing your life to a company and punching the clock to do something "easy" that might as well be done by a monkey -- and believe it or not, we have a whole bunch of people at the 'soft right now who believe that "work/life balance" means "work is just this little thing i do every day for 8 hours"... and i want all of those people to go away because they're as much of the reason we're in the toilet as our execs -- when you hire average people with no passion you don't have anyone to pay attention to what the execs are doing.
i want to do cool stuff -- and every once in a while i want things to get hot and hectic and maybe require me to work the occasional weekend or late night because there's some pressure and it's hard and it's exciting. and duh, my family will understand that every once in a while things will get hot and heavy at work and we'll work together as a family to make sure that things stay in balance.
because i have a spark and i don't want my job to be "easy". and what's more -- i don't want to work with people who want their jobs to be easy because those people suck.
and THAT, my friend, is *my* definition of "work/life balance", which is not the definition used by today's legion of stepford clock-punching zombies.
blech.
Raikes/Johnson power struggle, and KJ lost this battle?
That would be my bet. Raikes had his first win when he got Exchange Server, but he has wanted the entire server business for years, and now that Allchin is gone he got it.
On Apple aquisitons: good point, and I bet all those companies cost Apple a whole lot less than 6 billion too!
>> family will understand
I doubt you even have a family (i.e. kids). If you did, you'd rather be spending your weekends and evenings with them. The truth is, you don't have to work 80 hour weeks to do cool stuff. In fact you can easily outperform 80 hour workaholics if at work you concentrate on WORK and cut out the bullshit. It's called time management, and it's a tough art to master.
That would be my bet. Raikes had his first win when he got Exchange Server, but he has wanted the entire server business for years, and now that Allchin is gone he got it.
You think stack ranking is cutthroat for level 60 ICs, you can only imagine the politics that goes on when you're trying to position yourself to take over. Especially when your boss shows no signs of wanting to leave. :(
31.12 +0.29
9:00 am Monday.
Butaboombuttabing because reorg and Acq?
Jason said...
[ A bunch of hater, lower-case stuff about 9-5'ers at MS ...]
Spoken like a true noob, dude. MS needs more folks just like you -- if not to perform the work-hard-not-smart stuff that long-timers have figured out a way not to do, then to continue to feed the mystique of MS as a innovative, rewards-hard-work-and-dedication, young-and-nimble Place To Work.
I’ve got a question for you, noob. Once all those tried and true, backbone of the company (both time-wise and experience-wise) people are gone from your sweatshop, who is going to run the company while you are taking your “Hey, thanks for working 60-80 hour weeks for the last 5 years - now you 5000 people can take a free week” time off?
"i know a *ton* of people who have left MS at the 63/64 level in the last few years, and ain't none of them gone on to a massive paycheck -- they left to do cool stuff, and most of them took a fairly hefty cut in total yearly comp."
and
Jason sez
"yuck, both of those options are to be avoided at all costs IMO -- and it's people looking for that perfect and "easy" no-stress 9-5 job who i want OUT of *my* microsoft... LIKE YESTERDAY."
"because i have a spark and i don't want my job to be "easy". and what's more -- i don't want to work with people who want their jobs to be easy because those people suck."
Both you obiously miss the point.
First numbers and figures dont cover the whole compensation.
Secondly, just because someone values life AS WELL AS work doesnt not a "clock punching zombie" make.
Thirdly, "easy" is a relative term. "Easy" from an ex-MSFT perspective can simply mean being able to get work done without needless interferance and with a schedule that allows for some time to decompress regularly. I think the "Easy" Jason refers to is what anyone with any real ability and talent in this industry would refer to as "rote and boring". I know I would
During my life at MS, 'overtime' was not only expected, but BUILT into the bloody schedule. In my current position, when those rare late nights and weekends are required (and it does happen on occasion. That's part and parcel to this work) it is considered a failure of planning and the whole team works to avoid making that mistake again. And that is only one small example of the difference. Because someone desires a work schedule that is relatively stable and 'normal' doesnt mean they dont care about the product or company...it simply means they actually understand that poor dead horse: "Smarter not harder" and put it into practice. All too often, the long hours and extra effort in my experience at MS were because of someone else's failure. But the culture at MS didnt treat it as such. But rather as routine. That pissed me off.
Now my money comp is about an even wash. But I am happy with that. Why? The mortgage is getting paid. Retirement is on track. Enough is left over to enjoy a few minor extravagances now and again. My acid reflux is long gone. My weight is normal. My health is better. My wife smiles more. My family can actually expect me to attend school functions. We actually take family vacations that last more than a day or two. My children arent strangers. My wife and I enjoy a lot more sweaty, happy monkey sex. My work is challenging, interesting and we create software for an industry that is complex and that I have little understanding of (though I am learning quickly). Sorry Jason, but if that makes me a zombie, gimme another helping of brains, please.
So, the comnpensation is not *just* about the cash. Nor does it mean someone is worthless just because they found MS environment to be less than the perfect one for them. (or that they or the company changed so that it no longer suited them) Am I saying everyone should leave? Hell no. I am sure plenty of people thrive under the current MS culture. I *am* saying that showing contempt for someone who finds a different environment more productive for them is short-sighted, arrogant and dangerously ignorant.
yuck, both of those options are to be avoided at all costs IMO -- and it's people looking for that perfect and "easy" no-stress 9-5 job who i want OUT of *my* microsoft... LIKE YESTERDAY.
There is no honor or moral high ground in working super hard at Microsoft. Anyone who does is a sucker.
You can put in 80 hour weeks to make the perfect feature and then PM (through lack of skill and foresight) will arbitrarily change the design on you and invalidate half your work. Management might cut your feature entirely. On the off-chance that the feature turns out great, your PMs and managers will take all the credit and you'll be stuck with the same 5% raise that your lead gets for doing nothing.
Explain to me how this is something to strive for?
People are really hung up on the $6B figure. Seems the size of the number is more important than what the number means to Microsoft. In short $6B is well within Microsoft’s means; it isn’t chump change, but it only about what Microsoft has been spending a quarter to buy by stock. When a company buys back stock, that money just gone, the shares disappear. While a company can issue more stock at times, buy back stock isn’t always the greatest use of funds.
Now this $6B is going to be used to bring in more than $500M revenue and $50M of real profits and the company is growing about 3x what Microsoft is. This might be looking like a pretty good deal for Microsoft in a few years.
6 billion for one company that does nothing to boost one of the biggest concerns - decreasing marketshare. Microsoft just lost 10% of it's share and is down to 9% while Google sits at 55%.
Meanwhile, in the past 2 years there has been 6 billion invested in other companies - aol, myspace, 24/7, and Doubleclick. All of these increased both expertise in online advertising as well as increased market share. I don't understand this aquisition at all.
I keep hearing "Field of Dreams" in the back of my mind - Build it and they will come. Made for a good movie, but I don't know about it as a business plan for Microsoft.
The Apple aquisitions nearly all flow into the software package users get for free with a new Mac. The rest is either iPod-related or professional media related.
There's a direct link between these purchases and the value users get when they buy and use a Mac. In my view that makes these aquisitions very smart, as they really help sell the Macs.
This aQuantive acquisition may well be a similarly smart move. I've heard rumours about what these guys have in the pipeline, but nothing concrete so far. It may be that $6B was a good price or a horrible price, but we won't really know that for a few years.
"All Xbox needs to do is to make few millions dollars profit with a good growth rate to eventually reach a profit of $100M annually to justify all the expenses of developing Xbox business. Similarly all we need to do is to increase the growth rate or profitability of AQNT by few percentage points, due to synergy, to recoup the premium."
Your math here is seriously flawed. You might want to review and correct it before accusing others of having strange definitions for profitability.
because i have a spark and i don't want my job to be "easy". and what's more -- i don't want to work with people who want their jobs to be easy because those people suck
Coincidentally I don't want to work with people like you, who think they are the last coke in the desert. Lots of us can do in 8 hours what you can do in 12 hours, I'm sure you spend a good deal of your time whining, critizicing and backstabbing others. Hope I don't find you in my path....
Wisdom of the Crowd and mind-clearing effects of a weekend allowed the stock market to speak loud & clear: the AQNT acquisition was a great strategic move for Microsoft. Microsoft’s tactics signal this is a new challenge and it’s ready to update its playbook. It is encouraging Microsoft is adopting new tricks.
"Spoken like a true noob, dude."
"There is no honor or moral high ground in working super hard at Microsoft. Anyone who does is a sucker."
"Coincidentally I don't want to work with people like you, who think they are the last coke in the desert."
Wow, nothing like a spark of enthusiasm to bring the jaded and embittered to put it out.
Are you proud of your words? Would you wear them on a t-shirt in front of your coworkers? Would you post it on your office door?
No? Add lack of honesty and integrity to whatever else is wrong with you.
>>>>>>>>>"All Xbox needs to do is to make few millions dollars profit with a good growth rate to eventually reach a profit of $100M annually to justify all the expenses of developing Xbox business. Similarly all we need to do is to increase the growth rate or profitability of AQNT by few percentage points, due to synergy, to recoup the premium."
Your math here is seriously flawed. You might want to review and correct it before accusing others of having strange definitions for profitability.<<<<<
Xbox has sunk about $4B net. In the growth phrase, PE of 100 or even 1000 or even infinite is not unheard of.
If only Bill would declare June "Mythical Man-Month Month" in Redmond and make everybody read the book and apply it.
They should just hand a copy of this to everyone at NEO - or would that be kinda ironic at this point? Seriously though, this is a valuable book
There is no honor or moral high ground in working super hard at Microsoft. Anyone who does is a sucker.
On the off-chance that the feature turns out great, your PMs and managers will take all the credit and you'll be stuck with the same 5% raise that your lead gets for doing nothing.
It sounds like you don't know as much about playing the game as some around here do. MS is a political place. You have to sell your contributions as an FTE, just as much as you sold your technical skill to get in. That's the reality of the company today. If this doesn't work for you, find an employer that suits you better.
Explain to me how this is something to strive for?
It's not about honor or moral high ground, although I happened to like our product and the Puritan Work Ethic in me inclined me toward doing as much as I could to make it a success in the marketplace.
Here's what it's about: Stock awards approximately equal to 3/4 annual pre-bonus salary, two years running. Each year, not total.
Naturally it does require waiting the 5 years to see it all vest. That's why I changed groups to one with less starmaker ability, but also correspondingly much less stress. I know my limitations. A team with mostly-standard hours and much saner GPMs has been a good fit for me after a period that was quite different. My wife is glad that we can spend time together again.
To those who are considering leaving for work-life balance reasons. Consider changing groups. You might be surprised at the difference between groups occupying different subtrees on the org chart.
Anonymous notes: Your definition of profit is strange. If somebody buys Microsoft today, even without premium, by your definition, it will take 20 years to make a profit by the buyer.
Well, prior to acquisition AQNT had an MCAP of $2.7B and free cash flow of $63M (ttm March) for which MSFT spent $6B, or $3.3B of MSFT free cash to acquire AQNT's free cash flow: Assuming MSFT had its cash invested in US treasuries at, say 5%, that $3.3B was earning $165M/year, which has now been committed to paying AQNT shareholders in exchange for an acretitve free cash flow of $63M.
Assuming then that MSFT doesn't dismantle or impair AQNTs operation as it is assimilated into the Borg, Ballmer spent an *extra* (above and beyond mcap) $3.3B to forego an interest stream of $165M to receive instead a free cash flow of $63M.
So actually it will take 52 years for that $63M free cash flow to recoup the extra $3.3B spent to buy it, not 20 years, and US Treasuries would still have paid better. OTOH, for that free cash flow to recoup itself in, say 20 years, would require a purchase price of about $4B, which is still a 67% premium over market cap. Is that your definition of "profit"?
There are many ways to value acquisitions. If someone has one that shows a profit for MSFT, I'd like to see it.
And for those who insist this was a great strategic acquisition, Ok, then why is it strategic now but not years ago when AQNT was cheaper, and how exactly is MSFT going to leverage AQNT *without* diluting it? Inquiring minds still wanna know.
See also http://msftextrememakeover.blogspot.com/2007/05/its-official-ballmer-has-lost-it.html
"Xbox has sunk about $4B net. In the growth phrase, PE of 100 or even 1000 or even infinite is not unheard of."
More like $5B+ (and counting). Spinning off Xbox would be the most realistic (only?) way of recouping the money spent - assuming there was interest either in an IPO or by an external buyer. However, the whole goal of the "emerging businesses" was to provide the next growth areas for *MSFT*. Therefore, it's highly unlikely Ballmer will spin it off. So as an internal entity and at [your?] $100M annual profit, it would take FIFTY years to breakeven - not counting the opportunity cost. BTW, I happen to think it will make more than $100M annually at some point, but recouping the investment will still be measured in decades...
"So actually it will take 52 years for that $63M free cash flow to recoup the extra $3.3B spent to buy it, not 20 years."
Yeah, like the absorbed Aquantive's earnings could never possbily rise ... or drop.
"There are many ways to value acquisitions. If someone has one that shows a profit for MSFT, I'd like to see it."
Our stock price didn't dip after the acquisition. If the analysts for the institutional investors think it's good then it's good enough for me.
"Ok, then why is it strategic now but not years ago when AQNT was cheaper"
Ever eat an unripe fruit?
Charles, in your calculations the treasury interest is expected to remain the same but AQNT is growing like 50%.
Do the calculations again in taking this growth rate into account. You would see that AQNT was underpriced by the market. There were more than one player who were willing to give $6B.
>>"Spoken like a true noob, dude."
>>"There is no honor or moral high ground in working super hard at Microsoft. Anyone who does is a sucker."
>>"Coincidentally I don't want to work with people like you, who think they are the last coke in the desert."
>Wow, nothing like a spark of enthusiasm to bring the jaded and embittered to put it out.
Um, no. Nothing wrong with your spark of enthusiasm. You assume that everyone who doesn't want to put in the hours you do is a slacker with no talent. That's arrogant, and it torques people off. (Your presumption is also untrue - your level of talent is in higher supply than you like to think.)
Drop the arrogance toward those you have a different perspective, and you'll get farther when you try to say something...
MSS
"So actually it will take 52 years for that $63M free cash flow to recoup the extra $3.3B spent to buy it, not 20 years, and US Treasuries would still have paid better."
Lots of numbers, but no understanding!
Your numbers are based on an assumption that everything remains constant. However aQuantive is growing much faster than Microsoft. The scale of Microsoft should also help reduce costs and bring more money to the bottem line. That $62m FCF could and probably will change a great deal.
Another nice thing about this deal is that Google depends on aQuantive for a good bit of business. Isn't that interesting?
Thanks for making us feel so welcome!
(An aQuantive employee)
It is shocking so see so many people throwing numbers around as if they know what they are talking about when clearly they don’t. Or else they just want to bitch.
Okay, here is the deal. When revenue starts going up above the fixed costs of a business the margin starts heading down towards the variable costs. In aQuantive case, last year the fix costs were around $295M and the variable cost were $67.5 million. They ran at around 16% of sales. (On a income statement this is “Cost of Revenue”). From 2005 the fixed costs were increased by $87 million while the revenue grew by $134 million. It is also interesting to note that much of the fixed cost happen in the 4th quarter of the year with negative cost of revenue. (Is this some kind of pay at the end of the year thing?) Whatever that is it could be changing.
Okay, let’s assume the headcount will grow 10% a year pushing of the fixed cost. This year they are projected to grow the top line by 50% YOY … Lets use on 40% and run a few years and 20% for the variable costs.
This gives an equation for the bottom line of:
Profit = (442) * 1.4 ^ n * (1 - .2) – 295 * 1.1 ^ n
Where n is the number of years and 20% is the fixed cost.
If they can do that for a say 3 years … (Assume their same calendar year)
2007: 618 *.8 - 325 = $169 million
2008: 865 * .8 - 358 = $334 million
No point in going further as these things change all the time. The point is that this business is posed for some great growth if things go well. Microsoft must be banking on it. If it even goes close to this, this could turn out to be a great deal!
>>Wow, nothing like a spark of enthusiasm to bring the jaded and embittered to put it out.
>Um, no. Nothing wrong with your spark of enthusiasm. You assume that everyone who doesn't want to put in the hours you do is a slacker with no talent. That's arrogant, and it torques people off. (Your presumption is also untrue - your level of talent is in higher supply than you like to think.)
Drop the arrogance toward those you have a different perspective, and you'll get farther when you try to say something..."
OK, let's get one thing straight: i'm jason, the OP, and that second comment came from a kindred spirit -- not me.
but to expand on my original point -- i'm *not* talking about putting in 80 hour weeks and i'm not talking about giving my life over to microsoft in some kind of crazy zealot frenzy. what i *am* talking about is a new culture where people DEMAND that their professional lives fit into a 9-5 box, and it's these people who absolutely, yes indeed, do suck because they turn what needs to be a creative endeavor into regemented shift work.
to the guy who said i don't have a family and that i'm a noob -- wrong on both counts. i would wager that my family is probably larger than yours, and i'd also bet that i've been around the block more times than you have. just a hunch. but i love what i do and i'm *really* good at it, and i consider my job to be equivalent to a research scientist or physicist or movie director... insomuch as when you go after a big, hard, gnarly prize then sometimes you get so caught-up in the pursuit -- or sometimes the stakes are so high -- that you just can't tear yourself away... or everyone pulls together who's working on the project in the 12th hour to do something amazing that's never been done before.
and so, most of the time i make sure that i fit my weeks into a suitable container so that i get to be a full person and enjoy my family life and other pursuits... but sometimes the thrill of the chase, the high-stakes and the LOVE OF WHAT I DO means that i stay at work until 3am because i'm in the zone, or work a weekend or two here or there -- HERE OR THERE -- because we're rushing to hit our deadline and everyone is working like a highly oiled machine.
for those of you who can't relate to this and think i'm nuts -- YOU SUCK, and i don't want you at microsoft... although sadly there are more of you every year.
for those of you who can relate to this but have chosen to scale-back over time to devote more time to your families, that's peachy... but i would suggest that if you can't devote even a single weekend in a year, or a few late nights in a year, to the pursuit of something you're wildly passionate about doing that you've lost a vital part of what makes life great.
i'm not an 9-5er because *i can do really cool shit*, and sometimes i'm swept up in the madness of grasping for the brass ring. and it doesn't matter if i'm swept-up at microsoft, a startup or somewhere else -- the corporation isn't what's important... loving what you do because it captures your soul is important. family is critical -- love for what you for $$ do is also critical.
i felt like this when i was single and just out of college, and i feel like this at 40 with a big family and a whole lotta years in this industry. and i've watched us hire people who will never be able to experience this thrill and, i'm sorry, but y'all are not my people and y'all are responsible for the downfall of the company as much as any crazy executive nonsense.
this is not about working styles -- it's about love for what you do. and there are too many people at the new microsoft who have no love.
Indeed, a lot of numbers being thrown about. However, what originally sparked the debate was the suggestion that $100M in additional annual revenue somehow justifies the price tag. I agree though, that if we assume AQNT is a growth play (I keep reading 30-50% YOY) then sure, the price may indeed be justified.
I'm more curious though about the motivation behind the acquisition. MS has struggled to grow the online area of the business organically, which in my book is a failure of leadership because everyone knows MS hires the best and brightest engineers. And AQNT, being relatively tiny compared to MS, seems unlikely to affect real change in leadership after it is assimilated.
It seems to me, as a non-softie and long time customer, that MS has lost its soul. What drives MS these days? Almost every quote from MS execs about the acquisition has focused solely the growth rate of the online Ad market, and how MS wants a larger piece of that pie. Is this the only motivation? I fully understand that MS is beholden to its shareholders, so I expect a bottom-line explanation to some extent. But where is the overall vision, the desire to do something innovative, unique?
Wow, nothing like a spark of enthusiasm to bring the jaded and embittered to put it out.
I read the above and had similar thoughts. There is a concept of "Sustainable Pace" which is separated from "not having weekends".
I really believe that working 70 or 80 hours consistantly is a failure on all ends. The exceptions are situations like when you are building a business as a startup. Even that needs to show progress and slow down, because keeping up that kind of pace is extremely difficult.
FWIW, I find myself not being able to innovate as a developer nearly as well as I was before coming to MS. There are a lot of smart people, but looking from a high-level, so many things could be done if we made it easier for people to, not just change teams, but maybe even temporarily work on features that interest them.
For example, take some open source projects. People are able to see the needs, and contribute those sections that interest them. Imagine if we could setup a way to have people contribute features to products. Would it be hard? Absolutely - we have all sorts of things to worry about like security and internalization. But how empowering would that be?
this is not about working styles -- it's about love for what you do. and there are too many people at the new microsoft who have no love.
Alec Baldwin, precursor to the SPSA partner. :)
"That watch costs more than you car. I made $970,000 last year. How much you make? You see pal, that's who I am, and you're nothing. Nice guy? I don't give a shit. Good father? Fuck you! Go home and play with your kids. You wanna work here - close! You think this is abuse? You think this is abuse, you cocksucker? You can't take this, how can you take the abuse you get on a sit? You don't like it, leave. "
Anonymous notes: You would see that AQNT was underpriced by the market.
No, at 91 times trailing earnings or 65 times forward earnings AQNT is hardly underpriced. It clearly is overpriced by any metric you can find.
I already generously assumed that aQuantive at $2.7B mcap was a reasonable valuation for Microsoft to pay for aQuantive operations as-is, and I proceeded to provide an apples-to-apples comparison of the extra $3.3B paid by Microsoft (above and beyond the already overpriced mcap of $2.7B) relative to the extra revenue stream derived from aQuantive or US Treasuries. As I said, free cash flow (or discounted cash flow) is one of many valuation methods. However, for the ad-hoc purposes of this discussion, free cash flow provides a back-of-the-envelope reality check that quickly illustrated the huge disparity in what Microsoft paid vs received. Now, presumably someone knew that and has a compelling justification on some other profitable valuation - something better than "OMG! We must catch Google!" - because you don't want to be another $3.3B in the red and still fall further behind Google.
Anonymous notes: Your numbers are based on an assumption that everything remains constant. However aQuantive is growing much faster than Microsoft. The scale of Microsoft should also help reduce costs and bring more money to the bottem line. That $62m FCF could and probably will change a great deal.
Certainly aQuantive is a business that should grow. So let's assume the AQNT business scales up linearly and rapidly (another generous assumption) based on something Microsoft easily brings to the party (low-cost financing, market reach, infrastructure, supplier relationships...).
Let's assume further that the business doubles in the 1st year and doubles again the following two years. So over three years, aQuantive free cash flow goes from $63M to $126M in the 1st year to $252M in 3 years. But we assumed a linear scale up and so the SG&A + R&D to generate that goes from $295M to $590M in year 1 to $1.18B in year 3, and revenues are assumed to scale up linearly as well (to $884M in year 1 and $1.768B in year 3) out of which the scaled up SG&A + R&D is paid yielding the scaled-up free cash flow. BTW, data comes from http://finance.yahoo.com/q/cf?s=AQNT&annual
So, aQuantive free cash flow of $252M in year 3 (assuming a quadruple linear scale-up), results in that extra $3.3B being paid back in roughly 15 years, as opposed to 52. Certainly an improvement, but 15 years is still a very long horizon overwhich to recoup an investment, and quadrupling AQNT operations in the first 3 years is not likely achievable (especially under Microsoft's bureaucracy), but also its growth while leveling off ought not to go flat after 3 years. But best case, a near-exponential growth is required to get that $3.3B payback in 10 years (doubling every other year) or 5 years (doubling every year).
And another notes: Charles, in your calculations the treasury interest is expected to remain the same but AQNT is growing like 50%. Do the calculations again in taking this growth rate into account.
Ok. Note above that even at 50% growth (doubling every other year) profitablity is still 10 years out. Note futher that typically once a company reaches roughly $500M/year in size that 50%-100% growth rates are difficult to sustain, certainly over 10 consequtive years, and that above $1B/year exponential growth for 5 consequtive years is extremely difficult and rare. Sustained growth rates of 15-30% for companies of that size are considered exceptional. But growth rates that achieve profitability (given the high price paid up front) in 5 years or even 10 years are highly unlikley.
High growth also assumes Ad customers cooperate and are willing to do business with Microsoft, that Microsoft can retain them, and that Ad revenues are not pressured by competitive offerings (all significant uncertainties). That all assumes Microsoft can bring something to the party that aQuantive needs and Microsoft can cheaply, if not exclusively, supply without dissipating AQNT's focus or impairing revenue growth (i.e. stay out of its way). Consider: Has free cash flow from Great Plains quadrupled? Relative to Google, why should advertisers have any greater confidence in the viability of Microsoft/aQuantive (recall the blackeye Microsoft has gotten from Office Live and the damage done to those customers). There are several other risks not examined here.
What is presently, actually constraining aQuantive's growth that Microsoft can easily supply? How can Microsoft leverage/exploit aQuantive to significantly improve Microsoft's overall competitive position? Laslty, how will that happen credibly, timely and profitably (that means total revenues exceed total costs, expenditures, depreciation and amortization)?
Whether profitability is reached in 52, 15, 10 or even 5 years (depending on 52-years of flat to 5-years of exponential growth assumptions), a free cash flow analysis gives a quick idea of how stunningly expensive the aQuantive acquisition is.
To Jason:
I'm the guy who said "drop the arrogance". After reading your reply, I have to say, "Right on!"
There's life outside of work. If you don't have that, you need to find it. But there's also life AT work, and if it's "just a job", go do something else - something you actually care about.
MSS
The accounting analysis of AQNT is futile imo - the numbers alone don't work, no matter how rosy the assumptions. To justify the deal you need to buy into what management is telling you: that this will better position MSFT to take some indeterminate share, of some indeterminate sized Ad market, at some indeterminate point in time. If, as Berkowitz said yesterday, that's 10-20% of a $60-80-120B market a few years out, then the math may work. Otherwise it doesn't. Sadly, management's track record in this area is weak, and lack of any defined metrics for this deal doesn't help judge their subsequent success or failure (surprise). It's like you turning in your objectives with the statement "I hope to make some contribution, by being relatively successful, at some point in time -trust me" - except w/o another $B of SPSA bonuses along the way...
"Whether profitability is reached in 52, 15, 10 or even 5 years (depending on 52-years of flat to 5-years of exponential growth assumptions), a free cash flow analysis gives a quick idea of how stunningly expensive the aQuantive acquisition is"
Wrong!
aQuantive is already profitable.
The $6B will be a sunk cost and have no barring on future profit.
Did you guys study anything in school? Anyway, what is a better use of the $6B ... buying back 2% of MSFT or buying more than 2% growth for Microsoft?
Anonymous argues: aQuantive is already profitable.
lol - ok. Let's see your numbers that show the acquisition of AQNT at a $6B purchase price as "already [present tense] profitable".
And let's also see your definition of "profitable".
The $6B will be a sunk cost and have no barring on future profit.
Did you guys study anything in school?
Interesting concept. An analysis of whether paying $6B for AQNT was a good idea should not actually include the $6B figure because it is already a sunk cost.
I studied lots of things in school, but I guess I missed the class on Three Card Monty Accounting Logic.
"Ack! As in Ack!quisition..."
To paraphrase Ballmer:
'could Microsoft do whatever it is they're hoping to buy without paying $6 billion?'
(from his snarky comments about Google buying YouTube for $1.6 Billion)
Also, a direct quote from the same article on http://www.businessweek.com/technology/content/oct2006/tc20061011_940241.htm
"every time we do valuations, I wonder if we can afford to keep this hot for 10 years."
Ballmer apparently must think so... of course, Ballmer thinks a lot of things ;)
"Intellectual Property vs. Open Source: what's the strategy here? For the longest time, we've held off throwing punches here because we knew, although there are infringements, it would be costly to wage this battle on the public stage."
And really, what's the point of suing if its going to cost you more than doing nothing? Software patents are a bit like nuclear weapons; when both sides have them, neither side wants to actually use them... Consider that Jonathan Schwartz, Sun's CEO, just stated in his blog:
"Sun has what I'd argue to be the single most valuable and focused patent portfolio on the web (and yes, we'd use it to defend Red Hat and Ubuntu, both)."
http://blogs.sun.com/jonathan/entry/censoring_free_media_or_fighting
Its not really in the interest of any of the big players to wage software patent wars, since both parties will likely get burned badly... so who does it benefit?
Generally speaking, not those writing the code...
There comes a point when you really have to ask, 'Are the existence of software patents even in Microsoft's best interest?'
Microsoft ordered to pay $1.5 billion in MP3 patent lawsuit
http://arstechnica.com/news.ars/post/20070222-8910.html
Judge rules Microsoft infringed on Eolas patent [awards $500 M]
http://news.com.com/2100-1023_3-5141318.html
So there's $2B (though that will probably be reduced on appeal) that MS could have saved if there were no software patents.
The supreme court seems to be moving toward reigning in patents:
http://www.cbc.ca/technology/story/2007/05/01/tech-uspatentsupremecourt-20070501.html
which MS is even helping with:
http://news.zdnet.com/2100-3513_22-6180188.html
So here's a cynical question: can MS actually compete on the quality of its own code, or does it have to rely on FUD and extortion over unspecified patents?
"What changed? GPL3?"
Could be; Groklaw thinks that as soon as GPL3 is out, its game over for MS patent FUD:
http://www.groklaw.net/article.php?story=20070518124020691
http://www.groklaw.net/article.php?story=20070519090322431
Speaking of software patents, I should ask again; does any of this apply outside the US? AFAIK, there are no software patents in Europe. Which leads me back to the Mini's blog post:
"Microsoft and The European Union: how is this going? This isn't just a thorn in our side but rather a bramble growing through our veins. And we hear very little directly from our leadership regarding how this is going and how we expect decisions and outcomes to affect the company."
Here's a single item to consider in that respect; if you haven't seen it already, look at the maps on http://www.xitimonitor.com/en-us/browsers-barometer/firefox-march-2007/index-1-2-3-77.html
As of March, Europe averaged ~25% Firefox usage. Germany had over 35%, Slovenia nearly 45%. I think I can safely predict that by the end of the year there will be at least one European nation has majority Firefox usage.
MS is losing the European browser market in a big way *without* any help from regulators AFAIK.
And I will tell you from my own experience that Firefox on Windows is the same as Firefox on Linux...
The $6B will be a sunk cost and have no barring on future profit.
This is not true. The $6B is an investment. While some portion of an investment may be sunk cost, the total investment is not a sunk cost.
Sunk cost are unrecoverable. We expect to get a return for the $6B. A good investment would mean that the total return would be > $6B. Good luck trying to get there!
So now that we've overpaid for a bunch of people and assets, does that mean that all the people (and their exec) inside MSFT that were working on the same thing will be fired? I mean they failed right...and as such we had to buy someone. So they should go, no?
if we don't make back the $6B from the acquisition, i'd be shocked.
i don't question this move at all. i'm actually glad we're trying something instead of sitting around and continuing to get our ass kicked.
and the $6B number was a direct result of tough negotiations and at least one competitive offer.
get over it folks. we've made about as much as we can from software and it isn't a growth business anymore. not like advertising.
"So now that we've overpaid for a bunch of people and assets, does that mean that all the people (and their exec) inside MSFT that were working on the same thing will be fired? "
Do you really think people will be fired? I wouldnt be surprised if a bunch of the non performers become partners. The live search team has four development managers out of which three are partners. A bunch of the devs were previously testers. Given these non performers it is no surprise that our market share in search is in single digits
>if we don't make back the $6B from the acquisition, i'd be shocked.
As with any venture its a risk. The part that is most important to Microsoft is keeping the talent at aQu and providing an environment where they can thrive. Success has always been about people.
I suppose that Bunjie worked out ok, so long as Redmond leaves them alone.
And because the company is a Seattle company, that is a plus for MS, culturally anyway.
But I have seen whole development teams up and walk out the door because of a buyout or an ego crossed the wrong way, and I have seen companies fold because of loss of talent due to an acquisition.
we've made about as much as we can from software and it isn't a growth business anymore.
Ha, how is it then we keep posting record earnings/profits/etc. despite imploding web/services/advertising marketshare?
Just imagine how well we'd do if we made software that people actually wanted to buy. People lined up around the block at midnight to get a copy of Windows 95. Let's do that again. Instead of this Vista nonsense ("drrr, it looks real purdy") let's give customers features that are actually valuable, or at least improve their existing experience in some tangible way.
If you take 10% of your salary and invest it in Apple or Google, you'll make more than if you buy MSFT shares at a discount. Sad, but true.
Earlier today I wrote: "There comes a point when you really have to ask, 'Are the existence of software patents even in Microsoft's best interest?'"
I just noticed that Mark Shuttleworth, head of Canonical (the company that produces Ubuntu Linux) made a blog post titled "Microsoft is not the real threat" on http://www.markshuttleworth.com/archives/118
An extract:
---
Much has been written about Microsoft’s allegation of patent infringements in Linux [...] I don’t think Microsoft is the real threat, and in fact, I think Microsoft and the Linux community will actually end up fighting on the same side of this issue. I’m in favour of patents in general, but not software or business method patents. [...] I’ll just state for the record my view that software patents hinder, rather than help, innovation in the software industry. And I’m pretty certain that, within a few years, Microsoft themselves will be strong advocates against software patents. Why? Because Microsoft is irrevocably committed to shipping new software every year, and software patents represent landmines in their roadmap which they are going to step on, like it or not, with increasing regularity. They can’t sit on the sidelines of the software game - they actually have to ship new products. And every time they do that, they risk stepping on a patent landmine. They are a perfect target - they have deep pockets, and they have no option but to negotiate a settlement, or go to court, when confronted with a patent suit. Microsoft already spends a huge amount of money on patent settlements (far, far more than they could hope to realise through patent licensing of their own portfolio). That number will creep upwards until it’s abundantly clear to them that they would be better off if software patents were history. In short, Microsoft will lose a patent trench war if they start one, and I’m sure that cooler heads in Redmond know that. [...] Microsoft is not the real patent threat to Linux. The real threat to Linux is the same as the real threat to Microsoft, and that is a patent suit from a person or company that is NOT actually building software, but has filed patents on ideas that the GNU project and Microsoft are equally likely to be implementing. [...] We need to get consensus from the industry - including Microsoft, though it may be a bit soon for them - that software patents are a bad thing for society.
---
Note where Shuttleworth said "a few years"... Is that when Gates and especially Ballmer are gone? Will that mark the end of "the bad, old Microsoft"? (as Paul Thurrott put it on http://www.winsupersite.com/reviews/winvista_5308_05.asp)
"the Microsoft that ran roughshod over competitors in order to gain market share at any cost. The Microsoft that forgot about customers in its blind zeal to harm competitors. The Microsoft, that frankly, all the Linux and Apple fanatics always imagined was out there, plotting and planning their termination. The Microsoft that threatens Windows fans with needless legal threats rather than reaching out and creating constructive relationships with the very people who prop up the company the most."
One can hope :)
Regarding T.Higgins' comment on Wednesday, May 16, 2007 8:29:00 PM